KSK Energy Ventures

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KSK Energy Ventures is a stock exchange listed subsidiary of KSK Power Ventures plc. On its website it describes itself as "a power project development company in India" which was established in 2001. The company states that supplies power through "a combination of long term and short term Power Purchase Agreements (PPAs) to a combination of industrial and state-owned procurers and consumers in India." It also supplies power to other customers including in the cement, textiles, steel, chemicals, Automobiles and Auto ancillaries, heavy engineering and industrials sectors.

Background

The original backer of this project, JR Power Gen Private Limited, received a Terms of Reference for an 1800 MW (3 x 600 MW) project on October 7, 2010.

KSK Energy Ventures states that "this power project is planned being based on a fuel supply agreement that we have entered into with PIPDIC. The JRP SPV and PIPDIC signed a memorandum of understanding which specifies that PIPDIC shall procure a coal block from the GOI jointly with GMDC (Gujarat Mineral Development Corporation). PIPDIC has agreed that it will obtain a prospecting license upon allotment of the coal block and that the JRP SPV will have the exclusive responsibility for setting up one or more power projects for utilization of the coal available to PIPDIC from the coal blocks. The JRP SPV will use this coal to fuel the JR power project."

Connection with Coalgate and JR Power Project

In September 2012, several news reports alleged that family of S Jagathrakshakan, Minister of State for Information and Broadcasting in the United Progressive Alliance (UPA) government is a part of a company named JR Power Gen Pvt Ltd which was awarded a coal block in Odisha in 2007. It was the same company which formed a joint venture with a public sector company, Puducherry Industrial Promotion Development and Investment (PIPDIC), on 17 January 2007. Barely five days after, PIPDIC was allotted a coal block. According to the Memorandum of Understanding (MoU), JR Power enjoyed a stake in this allotment. However, JR Power had no expertise in thermal power, iron and steel, or cement, the key sectors for consumption of coal. Later, in 2010, JR Power sold a 51 percent stake to KSK Energy Ventures, an established player with interests in the energy sector. In this way, the rights for the use of the coal block ultimately passed on to KSK.

Reacting to this, Jagathrakshakan admitted to getting a coal block, and said that, "It is true that we got a coal allocation but it was a sub-contract with Puducherry government and then we gave it away to KSK company. Now, we have got nothing to do with the allocation but if the government wants to take back the allocation it can do so."

Connections with Banks

A September 2012 article in Live Mint provided this background on KSK Energy Ventures:

"KSK has attracted investments from Macquarie Bank Ltd, GE Capital International, Mauritius, Singapore’s Tree Line Asia Master Fund Pte Ltd, the UK’s Universities Superannuation Scheme Ltd, Infrastructure Development Finance Co. Ltd, the former Lehman Brothers Holdings Inc. and Morgan Stanley. The company’s parent, KSK Power Ventur Plc, is an Isle of Man-incorporated entity listed on the London Stock Exchange’s Alternative Investment Market. A KSK spokesperson, in an email response to questions from Mint, said the original promoters of the company remain on board. The promoters, chartered accountants by profession, were earlier the auditors for the Andhra Pradesh State Electricity Board. They started on their own by setting up small hydropower projects in the state. Vadlamani sold his stake to GE and is now based in Singapore. The company also has Anil Kumar Kutty, a former Indian Administrative Service officer, as a non-executive director. He was the first head of the Andhra Pradesh Transmission Commission and a joint secretary in the power ministry."

Power portfolio

The company states that it currently has a total installed capacity of 9862 megawatts (MW) from thermal power plants. Of this, 684 megawatts is from operating thermal plants, 3778 MW is under construction and 5400 MW under planning. The company also has 1065 MW of hydro cpacity under consideration and 71.5 MW of wind capacity.

Coal-fired power stations

Existing coal-fired power stations

KSK states on its website, as of May 2011, that its operating coal-fired power stations are:

• the 43 MW Sitapuram Power Plant in Dondapadu, Andhra Pradesh, India and was commissioned in March 2008.
• the 43 MW Arasmeta Captive Power Plant in Arasmeta, Janjgir-Champa District, Chhattisgarh, India and was commissioned in November 2006. The plant has a long-term Power Purchase Agreement (PPA) with Lafarge to supply Power to their two cement manufacturing facilities located at Arasmeta and Sonadih in Chhattisgarh;
• 135 MW VS Lignite Power Plant (VSLP) in Gurha Village, Bikaner District in the State of Rajasthan. The company states that the company has "entered into a power delivery agreement with various bulk consumers in state of Rajasthan and balalnce supplies to the local utility. The company states that epected coal consumption is one million tonnes a year from the Gurha (East) Lignite Block at Kolayat, Bikaner in Rajasthan. The company states that "VSLP has entered into a mining lease agreement with the Government of Rajasthan for a period of 30 years and the mining activity is complete." The power station, which was commissioned in March 2010, was built under an Engineering, Procurement and Construction contarct with the Chinese company, SEPCO.

Coal-fired power stations under construction

KSK currently has 4,183 MW of coal-fired power stations under construction. These are the:

• 540 MW Wardha Warora Power Plant, in the Warora Growth Centre, District Chandrapur, in Maharashtra. The first three units of the 4X135 MW plant have been commissioned with the final unit scheduled to be completed in April 2011. The company states that coal will be sourced from "western Coal fields". The plant is being built under contract by Shangdong Electric Power Construction Corporation (SEPCO).

• 43 MW Arasmeta Expansion Power Plant, in Arasmeta, Janjgir- Champa District, Chhattisgarh. The additional 43MW unit for the existing Arasmeta power plant is scheduled to be commissioned during April 2011. The company states that the power from the plant will "meet the additional energy requirements of Lafarge for the expansion of its cement plant in Sonadih and for its planned cement manufacturing facility in Chhattisgarh. The company states that it intends to source coal for the expansion from "Arasmeta SPV’s existing fuel access from SECL."

• 3,600 MW KSK Mahanadi Power Project, in Nariyara village, Akaltara Tehsil, Janjgir-Champa district, Chhattisgarh. The company states that "the original project was a 1,800 MW power project based on coal supplies from the Morga-II coal block by GMDC. With the availability of additional fuel from the Gare Pelma Sector III coal block in Chhattisgarh, the KSK Mahanadi Power Project has been expanded through the fast track development of an additional 1,800 MW of power generation capacity in the same location. This power project of 3600 MW is being setup in a single location and is scheduled to be commissioned on a unit-wise basis through 2012 and 2013." The company states that "pursuant to the various underlying agreements, power I to be supplied to GMDC , GIDC, GOC or nominated procuring entities and balance being tied up in line with current market practice." The company also states that seven million tonnes of coal per annum will be sourced from GMDC's Morga-II coal block in Chhattisgarh and a further seven million tonnes per annum from GIDC's Gare Pelma Sector III coal mines." SEPCO has also been selected to design and construct the power station.

Coal-fired power stations being planned

KSK currently has 5400 MW of coal-fired power stations under construction. These are the:

• 1,800 MW JR Power Project – Naini, Orissa. The company states that "this power project is planned being based on a fuel supply agreement that we have entered into with PIPDIC. The JRP SPV and PIPDIC signed a memorandum of understanding which specifies that PIPDIC shall procure a coal block from the GOI jointly with GMDC. PIPDIC has agreed that it will obtain a prospecting license upon allotment of the coal block and that the JRP SPV will have the exclusive responsibility for setting up one or more power projects for utilization of the coal available to PIPDIC from the coal blocks. The JRP SPV will use this coal to fuel the JR power project."

• 1,800 MW Wardha Naini Power Project – Naini, Orissa. The company states that "we entered into a memorandum of understanding with GMDC for the exploitation of coal reserves in coal blocks to be allocated by the GOI to GMDC. GMDC received, jointly with PIPDIC, a 250 million ton coal allotment from the Naini coal block in Orissa in substitution of another block."

• 1,800 MW KSK Narmada Power Project – Morga-I, Chhattisgarh. The company states that "we, together with IDFC, are planning to develop the KSK Narmada power project, a 1,800 MW coal based power project near the Morga-I coal block in Chhattisgarh through an SPV, KSK Narmada Power Company Private Limited (the “Narmada SPV”). The Company and IDFC have entered into a memorandum of understanding with the MPSMCL for fuel supply. The Company and IDFC have entered into a memorandum of understanding with MPSMC, pursuant to which MPSMC has agreed to apply to the GOI for allocation of coal blocks. MPSMC has since been allotted the Morga-I coal block in Chhattisgarh by the GOI. Under the terms of the memorandum of understanding, the Company and IDFC would, inter alia, enter into an agreement with MPSMC for coal mining and supply. This is currently under litigation in the High Court of Madhya Pradesh and provided that we can reach a fuel supply agreement with MPSMC, we intend to use the majority of this allotment to fuel the KSK Narmada power project."

Coal mining

On its website the company states that "to stay ahead in an uncertain global energy scenario and provide our customers with stable power supply at affordable prices, it is critical for us to secure fuel linkages. Since coal is likely to play a dominant role in India’s energy scene, keeping in line with our vision, KSK Group has decided to pursue the developer role in aggregation of coal reserves and the group has incorporated a separate company ‘KSK Mineral Resources Private Limited’ to undertake this initiative."

Contact details

KSK Energy Ventures Limited
8-2-293/82/A/431/A
Road No:22, Jubilee Hills v Hyderabad 500033, INDIA.
Phone: +91 40 23559922/23/ 24/ 25
Fax: +91 40 23559930
website: http://www.ksk.co.in/

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